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A General Equilibrium Analysis of the TPP Free Trade Agreement With and Without China

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  • Li Xin

    (The author is at the Institute of National Accounts, Beijing Normal University, National School of Development, Peking University, email: lxin8@pku.edu.cn)

Abstract

The approaching tenth year of the Doha Round with no achievements to celebrate indicates a failure of the World Trade Organization. Formal negotiations of the Round expired in 2005 without reaching a consensus, and informal negotiations were stalled in 2008. Thus, the Trans-Pacific Partnership (TPP), a recent initiative to deepen trade relations among countries bordering the Pacific, was greeted with applause and relief as a step in the right direction. This article discusses the region-wide Free Trade Agreement series of linked agreements that cover various members and issues. The recursive dynamic computable general equilibrium (CGE) model simulates two scenarios against the baseline, namely, a TPP agreement with China and without China. The preliminary results show that the TPP agreement without China cannot change the significant roles of markets and geography as the principal factors behind the economic integration of Southeast Asia with China. Trade and investment agreements facilitate market forces, they do not oppose them. The integration of the Asia–Pacific countries may benefit the US and other key economies. JEL Classification: F12, F14, F15

Suggested Citation

  • Li Xin, 2014. "A General Equilibrium Analysis of the TPP Free Trade Agreement With and Without China," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 8(2), pages 115-136, May.
    • Handle: RePEc:sae:mareco:v:8:y:2014:i:2:p:115-136
    DOI: 10.1177/0973801013520006
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    References listed on IDEAS

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    3. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    4. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2008. "How Much of Chinese Exports is Really Made In China? Assessing Domestic Value-Added When Processing Trade is Pervasive," NBER Working Papers 14109, National Bureau of Economic Research, Inc.
    5. Chunding Li & John Whalley, 2012. "China and the TPP: A Numerical Simulation Assessment of the Effects Involved," NBER Working Papers 18090, National Bureau of Economic Research, Inc.
    6. Peter J. Lloyd & Donald Maclaren, 2004. "Gains and Losses from Regional Trading Agreements: A Survey," The Economic Record, The Economic Society of Australia, vol. 80(251), pages 445-467, December.
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    Cited by:

    1. Chandrima Sikdar & Kakali Mukhopadhyay, 2017. "Economy-wide impact of TPP: new challenges to China," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 6(1), pages 1-29, December.

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    More about this item

    Keywords

    Trans-Pacific Partnership; Economic integration; Free trade agreement; Rules of origin;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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